Commission on Health and Safety and Workers' Compensation
Information Bulletin

SAN FRANCISCO -- The Commission on Health and Safety and Workers'
Compensation (CHSWC) has updated its report on "Workers Compensation and the
California Economy", originally issued in April 2000.

Various proposals to increase workers compensation benefits
submitted to the Legislature have raised concerns that such increases would have a
negative impact on the California economy and on California employers and employees. The
Commission report was developed to provide information and analyses of workers
compensation costs in relation to the California economy.

The Commission concluded that the California economy, the largest and
most diverse in the nation, is robust and is projected to continue that way. Economic
growth in California is expected to continue exceeding that of the nation, reflecting
faster population growth and the states favorable mix of high-tech industries. The
resources appear to be there to provide adequate compensation to those workers who lose
their ability to compete in the labor market.

California's industrial injuries and illness rates have declined
significantly in all industries and sectors between 1988 and 1998 even though
Californias economy was growing. This improvement has been ascribed to a number of
factors including shifts in the workforce, greater emphasis on work-place safety,
continued efforts to combat workers compensation fraud, and changes in employer
reporting patterns.

The relative costs of workers compensation have declined during
the past decade. The ratio of workers compensation costs to total payroll (and to
other economic indicators such as the Gross State Product and Personal Income) has dropped
significantly during the 1990s.

However, workers compensation benefits have not kept up with
inflation. For example, the value of the permanent disability benefit after adjustment for
inflation has declined to below 75% of its value in 1984. Consideration should be given to
indexing benefits.

Whenever a benefit increase goes into effect, the Commission on Health
and Safety and Workers Compensation should study the impact of benefit increase on
wage loss of workers, time-out of work, the benefit adequacy and equity, costs and
utilization. This should include an ongoing evaluation of the adequacy of workers
compensation benefit levels and recommendations for adjustments as needed.

The Commission, created by the workers' compensation reform legislation
of 1993, is charged with overseeing the health and safety and workers' compensation
systems in California and recommending administrative or legislative modifications to
improve their operation. The Commission was established to conduct a continuing
examination of the workers' compensation system and of the state's activities to prevent
industrial injuries and occupational diseases and to examine those programs in other
states.

Information about the Commission may be accessed on the internet at the
California Department of Industrial Relations' home page at www.dir.ca.gov/CHSWC.
Information may also be obtained by writing to Christine Baker, Executive Officer,
Commission on Health and Safety and Workers' Compensation, 455 Golden Gate Avenue, 10th
Floor, San Francisco, California 94102, by calling (415) 703-4220, or by faxing a request
to (415) 703-4234.